| Summary: | This dissertation provides an empirical investigation on the underpricing of initial public offerings (IPOs) in Chinese stock market and analyse the possible determinants which results in the underpricing. A sample of 1048 underpriced Chinese A-share IPOs data during the period from 2006 to 2014 are selected to test various hypotheses based on the previous theories and Chinese specific characteristics. Additionally, this dissertation also attempts to seek the effects of IPO reforms during 2009 to 2013.
The results in this paper suggests that signalling theory, principle-agent theory, winner’s curse theory, speculative bubble theory, information cascades theory, ex-ante uncertainty theory can explain the underpricing in Chinese IPO market. Offer price, agency costs and firm age are negatively related to IPOs underpricing. Subscription level, turnover rate and financial industry are positively related to IPOs underpricing. The time interval theory, underwriter reputation theory and specific-industry hypothesis cannot explain Chinese IPOs underpricing. Besides, IPO reforms in 2009 conducted by CSRC also have effect on IPOs underpricing. The finding also suggests that after IPO reforms in 2013 the level of IPOs underpricing increases which is contrary to expectation.
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